This is probably the safest form of passive investing because your cash is backed by a lien on the property. You can also pool your money together through crowdfunding or syndication, listed below.
The newest game in town is crowdfunding. This is where investors pool their funds together and buy equity or debt investments in a specific piece of real estate. A 3rd party company does the due diligence, investigates the sponsors, and verifies the financials before putting it on their platform. Since the investment is being advertised publicly, generally only accredited investors can participate (earn >$200k/year or net worth > $1m)
This is the oldest game in town. Long before crowdfunding ever existed, people have been “crowdfunding” through syndication. The key difference is these deals cannot be advertised and you need to have a relationship with the deal sponsor.
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Virtually anybody can get started with small rental property because just about everyone can eventually qualify for standard financing. There are a lot of strategies to start and grow, but almost all of them require a lot of time and effort.
2. Become a Syndicator (Deal Sponsor)
A syndication has general partners and limited partners. For the GP’s, this is an active form of real estate income whereas for the LPs it’s completely passive. To be a deal sponsor you will need to build a network of investors, brokers, lenders, and other professionals so you can find, structure, and fund the deals.
3. Become a Co-Sponsor
A co-sponsor usually brings something to the table, but isn’t able (or doesn’t want to) be the sole deal sponsor. If you can raise money from a network of friends/family, are an expert at property management or operations, or have access to great off-market deals, you can probably co-sponsor a deal with another syndicator.
Learn how to find off market deals and how to raise capital for those deals